It can be daunting to trade crypto, especially if it is your first time. As with other investment classes, it is important to start small and then go deeper as you get more experience. We have your back, the good news is! These are ten golden rules that will help you on your trading journey. In this post, we will discuss some best rules of success that help you trade cryptocurrency in the market effectively Let’s get started.
Rule 1: Always Use a Trading Plan
A trading plan is a set of rules that outline a trader’s entry and exit points, as well as money management guidelines for each purchase. You can quickly test your trading ideas before risking real money. With backtesting, you can test your trading idea with historical data to see if it’s viable. After a plan is developed and back-tested with good results, it can be used for real trading.
Rule 2: Use a Trusted Platform
India does not regulate the crypto industry and new companies are popping up every day. The ban placed by the RBI on cryptos was overturned by the Supreme Court and the government hinted that they will take a more balanced approach to regulate the sector. However, investors should be cautious when selecting an intermediary. You should be aware that overseas platforms may have higher tax compliance.
Rule 3: Trade Small
Start small and aim for modest gains at first. While some traders have made millions trading btc, Ethereum, and other cryptocurrencies, many others have lost all or part of their money, much like the lottery winners.
Rule 4: Treat Trading Like a Business
Trading must be approached as a full-time or part-time job and not as a hobby. It’s not worth the effort to learn if it’s treated as a hobby. The lack of regular income can make it frustrating if it becomes a job. Trading is a business that can bring you losses, tax, uncertainty, stress, and risk. You are basically a small business owner as a trader. Strategic planning and research are essential to maximizing your business’s potential.
Rule 5: Focus on Bluechips
The cryptocurrency market has bluechips and mid-caps just like the stock markets. Do not be tempted to buy obscure coins because they are cheap. Although larger coins are generally more expensive, they are also more stable. You can still buy fractions of coins so don’t be concerned about the price. However, btc is the most important cryptocurrency and drives market sentiment.
Rule 6: Never Buy on Margin
Margin is when you borrow money from a brokerage to increase your purchase power. This leverage is a double-edged sword. You can make significant profits if you are right. If you’re wrong, you could owe more money than you invested. Smart traders understand how to manage risk and avoid borrowing money to purchase crypto. KuCoin is the best platform for buying and selling cryptos. You can trade or purchase cryptos from anywhere you are with its many features.
Rule 7. Stay Up-to-Date on Global Events
You may not be able to buy and sell in India, but the cryptocurrency market is available all over the globe. Global developments can have an impact on prices. It is important to keep up to date with what’s happening in key markets such as the US, Singapore, and Europe. Manish P. Hingar (Founder, Fintoo) says that the crypto price fell in May because of the US crypto tax. A savvy investor won’t get caught off guard. Crypto trading is available 24×7. This allows one to act instantly, unlike stock markets that require one to wait until trading opens the next day.
Rule 8: Keep Trading in Perspective
Keep your eyes open to the bigger picture when trading. It’s not surprising that trades are lost. It’s a normal part of trading. A successful trade is just one step in the journey to a profitable business. Profits make a difference in the long run. The trading performance will not be affected by emotions if traders accept losses and win as part of their business. Although we may be pleased with a trade that is successful, losing trades are not uncommon.